“Bah, humbug!” pretty much sums up Southland home sales for November. According to this story in the L.A. Times, sales last month in six Southern California counties were down a whopping 43 percent compared to a year ago. And prices were down 10 percent year over year, the worst such decline in 20 years.
According to DataQuick, the median price for a home in Southern California fell to $435,000, down 14% from a peak of $505,000 earlier this year. Prices are now on par with what they were selling for in early 2005. Values eroded the most in Riverside County, sinking 16.5% from November 2006 to $356,500. Orange County saw a more modest 6.5% year-over-year drop to $582,750. Los Angeles County posted the smallest decline: 3.5%, to $499,000.
The story quotes L.A. economist Christopher Thornberg, who has revised his prediction that prices will fall 20 percent from their peak. He now believes the decline will be 30 percent.
Thornberg thinks that most of the price decline will occur in the next two years, but that home prices will fall through 2011. “There will be no bounce. It took years for the market to go up to the top. It will take years for it to go down to the bottom.”
There are plenty of us who want to believe the market will bounce back sooner. People who want to sell, people who want to buy, builders, Realtors — anyone who has a financial stake in seeing this market recover wants to think the optimists are right. But it’s people without a stake in the market, like Thornberg, who are likely to render the most accurate opinions. The last downturn lasted six years. We’ve just started Year 3.
It’s going to be a bumpy ride.